India considers Bitcoin tax legislation to tap $5bn market
The Indian government could impose taxes on Bitcoin trading, despite the lack of legal clarity for the crypto sector
India’s finance ministry has called for the implementation of tax regulations on Bitcoin (BTC) in the country. According to the Times of India, the Central Economic Intelligence Bureau and the Crypto Cash review, or CEIB, recently presented a draft proposing the imposition of an 18% tax on Bitcoin trading.
Figures estimated by the CEIB put the volume of Bitcoin transactions in India at over $5.4 billion.
Therefore, the proposed 18% tax would bring in around $970 million for the government
Under the proposed plan, the CEIB is lobbying to classify virtual currencies as „intangible assets,“ bringing them under the purview of the GST, with taxes levied on profits from trading.
Commenting on the news, Tanvi Ratna, CEO of Indian crypto consultancy Policy 4.0, tweeted:
„Unfortunately, this does not necessarily imply that cryptos will be legal. Under Indian law, even illegal income is taxable and evading taxes on it counts as criminal activity.“
In 2011, India’s finance ministry made it clear that tax evasion on illegal sources of income is a criminal offence. At that time, the government was committed to reclassifying all forms of tax evasion as criminal offences.
Excluding the Supreme Court’s annulment in March of the Reserve Bank of India’s ban on banks offering services to crypto exchanges, not much has happened in the context of crypto regulations in the country.
The lack of regulatory clarity is reportedly hampering greater investor involvement in the sector. However, the Indian peer-to-peer crypto trading market continued its growth in 2020.